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Is Buying Sun Hung Kai & Co Limited (HKG:86) For Its Upcoming $0.14 Dividend A Good Choice?

Have you been keeping an eye on Sun Hung Kai & Co Limited’s (SEHK:86) upcoming dividend of HK$0.14 per share payable on the 28 June 2018? Then you only have 2 days left before the stock starts trading ex-dividend on the 19 June 2018. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I examine Sun Hung Kai’s latest financial data to analyse its dividend characteristics. Check out our latest analysis for Sun Hung Kai

Here’s how I find good dividend stocks

Whenever I am looking at a potential dividend stock investment, I always check these five metrics:

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  • Is it paying an annual yield above 75% of dividend payers?

  • Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?

  • Has it increased its dividend per share amount over the past?

  • Can it afford to pay the current rate of dividends from its earnings?

  • Will it be able to continue to payout at the current rate in the future?

SEHK:86 Historical Dividend Yield Jun 16th 18
SEHK:86 Historical Dividend Yield Jun 16th 18

How well does Sun Hung Kai fit our criteria?

The current trailing twelve-month payout ratio for the stock is 30.96%, which means that the dividend is covered by earnings. Going forward, analysts expect 86’s payout to increase to 36.21% of its earnings, which leads to a dividend yield of around 8.25%. However, EPS is forecasted to fall to HK$0.83 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income. If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. Dividend payments from Sun Hung Kai have been volatile in the past 10 years, with some years experiencing significant drops of over 25%. These characteristics do not bode well for income investors seeking reliable stream of dividends. Relative to peers, Sun Hung Kai produces a yield of 5.39%, which is high for Consumer Finance stocks.

Next Steps:

With these dividend metrics in mind, I definitely rank Sun Hung Kai as a strong income stock, and is worth further research for anyone who considers dividends an important part of their portfolio strategy. Given that this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. I’ve put together three fundamental factors you should further research:

  1. Future Outlook: What are well-informed industry analysts predicting for 86’s future growth? Take a look at our free research report of analyst consensus for 86’s outlook.

  2. Valuation: What is 86 worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether 86 is currently mispriced by the market.

  3. Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.


To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.